Integration of markets vs. integration by agreements
AbstractThis paper provides an analysis of the two channels of regional integration: integration via markets and integration via agreements. Given that East Asia and Latin America are two fertile regions where both forms of integrations have taken place, the authors examine the experiences of these two areas. There are four related results. First, East Asia had been integrating via markets long before formal agreements were in vogue in the region. Latin America, by contrast, has primarily used formal regional trade treaties as the main channel of integration. Second, despite the relative lack of formal regional trade treaties until recently, East Asia is more integrated among itself than Latin America. Third, from a purely economic and trade standpoint, the proper sequence of integrations seems to be first integrating via markets and subsequently via formal regional trade agreements. Fourth, regional trade agreements often serve multiple constituents. The reason why integrating via markets first can be helpful is because this can give stronger political bargaining power to the outward-looking economic-oriented forces within the country.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 4546.
Date of creation: 01 Mar 2008
Date of revision:
Trade Law; Free Trade; Trade and Regional Integration; Trade Policy; Emerging Markets;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-03-15 (All new papers)
- NEP-INT-2008-03-15 (International Trade)
- NEP-SEA-2008-03-15 (South East Asia)
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- Nathalie Aminian & K. Fung & Francis Ng, 2009. "A comparative analysis of trade and economic integration in East Asia and Latin America," Economic Change and Restructuring, Springer, vol. 42(1), pages 105-137, May.
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